Praemium (ASX:PPS) executives used the company’s FY26 first-half earnings call to emphasize accelerating platform growth, early operating leverage and a major reshaping of its technology function following the acquisition of Technotia Labs.
Chief executive officer Anthony Wamsteker said the company’s priorities remain “to grow the business strongly,” expand financial leverage and invest in future opportunities, particularly those created by rapid advances in technology. He also pointed to operational focus areas including improving onboarding efficiency to shorten the time between winning clients and recognizing revenue.
Financial performance and operating leverage
Underlying EBITDA increased to AUD 15.2 million from AUD 12.9 million a year earlier, with Stepcic attributing the margin improvement to disciplined cost management and initial OneVue synergies. Operating expenses were “broadly flat” at AUD 40.8 million. The company cited AUD 1.6 million of OneVue cost synergies from reduced headcount, platform costs and administrative support, with some synergies realized midway through the half and a full run-rate expected in the second half.
Employment costs increased versus the prior period due to wage inflation and short-term incentive outcomes for FY25 that were not provided for in the prior period, Stepcic said.
FUA growth, Spectrum traction, and outflows from exiting advisors
Praemium reported platform funds under administration (FUA) of AUD 32.5 billion at the end of the half, up 8% from the first half of FY25. Platform net inflows were “just over AUD 1 billion,” which management said nearly doubled versus H1 FY25 and increased more than 200% versus H2 FY25. The company noted, however, that this acceleration was tempered by AUD 827 million of gross outflows tied to exiting advisors, which it expects to diminish over time.
The company highlighted continued adoption of its Spectrum product, launched just over a year ago. Spectrum FUA was AUD 3.6 billion, and management said the product has delivered more than AUD 1.4 billion of new business growth inflows since launch. Stepcic described the Spectrum pipeline as “encouraging,” while noting the company will monitor trends over the financial year to inform longer-term performance expectations.
During Q&A, Wamsteker said Spectrum’s margin has been initially lower due to high average balances among early adopters. As more accounts are onboarded, he said he expects the average account balance to fall and margins to “align more closely to the total platform margin over time.”
Non-custodial growth and onboarding focus
Praemium reiterated its positioning in non-custodial reporting through Scope and Scope+. Stepcic said Scope+ FUA increased 19% to AUD 37.9 billion versus H1 FY25, with portfolio numbers rising to around 10,700. She added that a significant customer was partially onboarded and further increases are expected in the second half.
Scope portfolio numbers declined by nearly 6% compared with the prior first half, driven by a managed client exit, partially offset by new portfolios onboarded in the second quarter. Stepcic said the company is seeing a mix shift toward Scope+, which improves the quality of portfolio revenue.
Portfolio services revenue was AUD 10.2 million, down from AUD 10.5 million in the prior half, reflecting the reduction in Scope accounts. Scope+ revenue increased 6% versus the prior half year, while the company said portfolio growth was more than 13%; Stepcic attributed the lower revenue growth to portfolios onboarding late in the half, meaning the full revenue run rate has yet to be realized.
Asked about the flatness in non-custodial revenue, Wamsteker said the company made changes that reduced revenue in the short term but were aimed at winning clients for the long term. He said the company is not using “aggressive discounting,” though it does offer lower, scaled pricing for enterprise clients as part of its strategy.
OneVue synergies and technology restructuring tied to Technotia
Management said OneVue is shifting from an integration project to a contributor. Stepcic noted OneVue recorded an EBITDA loss of around AUD 0.5 million in H1 FY25. In H1 FY26, the company captured AUD 1.6 million of cost synergies, but these were offset by revenue reduction from exiting advisors; net synergies were AUD 0.2 million for the half and the EBITDA loss narrowed to around AUD 0.3 million.
With the transition completed, Praemium has exited its transition services agreement with Iress and “crystallized the full headcount reductions.” Stepcic said the company is on track for an EBITDA uplift of “above AUD 3 million” in FY27 once all synergies are captured. In response to an analyst question, Wamsteker said there is “no reason” the company would not have a full year of synergy in FY27, noting some synergies were realized only in February after exiting the TSA.
On Technotia, the company said it is undertaking a targeted restructure to simplify the technology division and embed Technotia’s capabilities into Praemium. Stepcic said the restructure resulted in an approximate 28% reduction in headcount and net salary savings of around AUD 9 million. The actions were “largely completed” in Australia, with the Armenian office expected to close by the end of the financial year.
In FY26, Stepcic said the company does not expect major changes to underlying EBITDA from the restructure because much of the reduction will impact capital expenditure rather than operating expense. Looking to FY27, she said the company expects operating costs to stabilize, operating leverage to increase, underlying EBITDA margin to improve and CapEx to be lower.
Wamsteker said the company plans to operate as one integrated technology division through year-end before providing clearer visibility on CapEx versus OpEx splits, but indicated total tech spend previously was around AUD 28 million, and the AUD 9 million salary reduction provides a guide to the new run rate.
In discussing execution risk, Wamsteker said Praemium conducted extensive due diligence and had worked with Technotia for 18 months, including daily reporting and close engagement. He said Technotia has financial services experience, including work connected to Brookfield, and that Praemium retained key experienced members of its own technology team while avoiding duplication in leadership roles.
Cash flow and management’s outlook
Operating cash flow for the half increased to AUD 6.5 million from AUD 5.2 million in the prior corresponding period. Free cash flow was an outflow of AUD 4.1 million due to elevated one-off investing cash flows. Stepcic presented an “underlying” free cash flow measure of AUD 3.3 million, adding back AUD 2 million in OneVue transition and redundancy costs and AUD 5.2 million of investment in technology projects with Technotia, as well as acquisition costs.
Looking ahead, management pointed to multiple tailwinds it expects to support earnings and free cash flow growth, including the completion of OneVue integration, continued Spectrum wins and efficiency gains from Technotia’s integration. Wamsteker said the business has “good operating and financial momentum,” a healthy sales pipeline, and he reiterated confidence in sustainable earnings growth.
About Praemium (ASX:PPS)
Praemium Limited, together with its subsidiaries, provides advisors and wealth management solutions by seamless digital platform experience in Australia and internationally. The company offers technology solutions, such as reporting, online business management, digital engagement, tax and corporate actions, and investment governance. It also offers product solutions, which includes private wealth, investments and superannuation, software licensing, and third party administrations. In addition, it provides managed accounts platform that includes virtual managed accounts and virtual managed accounts administration service.
